Says customers not into renting music — and I agree.
Record labels have been supposedly asking Apple to introduce a music subscription service to its iTunes digital music download store in an attempt to increase profits but, Steve Jobs is adamant that “customers don’t seem to be interested in it”.
Apple is gearing up for contract renewal negotiations with the major record labels over the next month and you can be sure that Jobs will be pressured to increase their share of profits.
The record industry has long been frustrated that Apple has reaped most of the profits of the rising digital music market via sales of its popular iPod. To date they have earned only modest royalties from digital music sales because most of the songs on iPods and other portable music devices are alleged to be obtained by illegal downloading.
Now how you can be angered by the fact that a USER is “misusing” an electronic device and expect to be compensated by its manufacturer, especially when in the meantime they are doing you the favor of having your content locked down tight with DRM, is beyond me but, as usual it seems like music labels are bent on killing the proverbial goose that’s laying the golden egg.
Hoping to increase profits to offset decreasing CD sales, many in the music industry hope iTunes will consider offering a subscription-based iTunes so that record companies can make more money from recurring income. Universal and other labels believe a subscription service could be more lucrative for them than iTunes standard 99 cents per track model, because it would increase consumption of music. It would also entitle the labels to a share of monthly payments, in addition to small licensing fees each time their songs are played. But, Jobs, to his credit, says consumers don’t want it.
“Never say never, but customers don’t seem to be interested in it,” Jobs told Reuters in an interview after Apple reported blow-out quarterly results. “The subscription model has failed so far.”
“People want to own their music,” he said.
Exactly. Why on earth would people pay money to never actually own anything? I guess it could be offered, and then those who like the model could then have the option of using it instead but, I think it may prove too difficult to try have to simultaneous iTunes music download systems.
Considering that just about every subscription music service such Napster, RealNetworks’ Rhapsody, and Yahoo’s Y! Music Unlimited have for all intensive purposes failed, I think that Jobs is smart enough to realize that consumers just don’t like it. They want to actually own what they dish out cash for. It’s a pretty crazy concept I know but, considering we already have to rent so many other media offerings like cable TV, internet access, satellite radio, etc, etc, people want to own something for a change if possible.
The battle between Jobs and the music labels is about to begin again, and this time I just hope that he gets some concessions regarding DRM. I guess we’ll just have to wait and see.
By the way, if you get a chance, there’s an interesting profit breakdown for iTunes over at AppleInsider that offers a curious glimpse as to who’s getting what. After all is said and done, it looks like Apple is getting about making about 10 cents per download.
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